South Korea's Hyundai Engineering & Construction said on Monday that it had scrapped a $521 million deal to build a petrochemicals complex in Iran because Iran's ability to fund the project has been hit by the prospect of U.S. economic sanctions.
Hyundai had signed a contract to build the complex on the Persian Gulf coast, near the southern town of Tonbak, in March 2017. South Korean and Iranian media said the contract was for the construction of the second phase of the Kangan Petro Refining Complex in the South Pars Gas Field.
In a regulatory filing, Hyundai said the consortium it was leading for the project canceled the contract on Sunday.
"The contract was canceled because financing is not complete, which was a prerequisite for the validity of the contract, as external factors worsened such as economic sanctions against Iran," Hyundai said in its filing.
The United States plans to reimpose sanctions against Iranian crude oil exports as part of President Donald Trump's efforts to force Iran to accede to a more restrictive deal on limiting its nuclear and missile programs.
A day after Hyundai made the announcement, there were no mentions of it in Iranian state media.
"Now, the Iranians have to more or less start over and find somebody new. All of this takes time. As it takes time, the Iranian economy sinks," Johns Hopkins University applied economics Professor Steve Hanke said.
He said that it was likely that Iran would turn to China or Russia to help finance the petrochemical project.
